Fiscal Crisis of the States

We have talked largely about the U.S. fiscal crisis....but have not mentioned as much about the crisis facing most of our states.

Sadly, these soon coming fiascoes are going to affect us all...regardless of whether it happens in California, Arizona or New York.

Remember what we have said in the past...when the U.S government borrows money from China they have to pay it back with interest. Right now we are benefiting from a low interest rate because we have always had great credit. But very soon, China and others will demand more interest because our credit isn't as good as it once was. When this happens, it will immediately increase the present value of our outstanding debt...and if the interest rate goes high enough...we will be insolvent and no one will loan us any more money.

The exact same thing is happening with the states...and it will happen first. It may end up like a domino effect which ultimately leads to the U.S. becoming insolvent.

In today's Wall Street Journal we have an article written by the lieutenant governor of New York...and he is sounding the alarm. Ironically, this man happens to be a democrat.

It seems almost inevitable now that the states' fiscal problems will have further effects on capital markets, possibly as soon as next spring and summer. If more cracks appear in the capital markets that handle municipal bonds, the U.S. Treasury and the Federal Reserve will be faced with an unattractive set of options: They can allow those markets to deteriorate or use federal tax dollars to shore them up and thereby increase the federal deficit.

Read full article here; http://online.wsj.com/article/SB20001424052748704130904574644131951994574.html

The Lord will continue to pull away our false god. This will be painful but the outcome will serve to purify many.